EMERGING MARKETS-Latam FX weakens on policy uncertainty

* Uncertainty over ECB, Fed action saps risk appetite
* Brazil central bank not expected to roll over swap
contracts
* Brazil real weakens 0.7 pct; Mexico peso down 0.4 pct

By Natalia Cacioli
SAO PAULO, July 30 (Reuters) - Latin American currencies
snapped three days of gains on Monday as investor caution ahead
of policy meetings by the U.S. Federal Reserve and European
Central Bank later in the week fueled demand for the safe-haven
dollar.
Currencies in the region strengthened late last week after
ECB President Mario Draghi pledged to do whatever it takes
within the bank's mandate to preserve the euro.
Investors are now waiting to see what action the ECB will
take when it meets on Thursday, while also looking for signals
of more policy stimulus from the U.S. Federal Reserve at its
meeting on Tuesday and Wednesday.
"Investors are still walking on egg shells due to the
situation in Europe," said Reginaldo Galhardo, a foreign
exchange manager with Treviso Corretora in Sao Paulo. "Investors
are bypassing risk and looking for safety in the dollar. People
are waiting for the ECB meeting to see what kind of adjustments
will be made to solve the crisis."
The Brazilian real led losses in the region,
weakening 0.7 percent to 2.0365 per dollar, followed by the
Mexican peso, which was down 0.4 percent at 13.2850 per
greenback.
The real was further pressured by investor expectations that
Brazil's central bank will not roll over swap contracts expiring
on Wednesday.
"It's very possible that the central bank will not carry out
this rollover because we are closer to 2 reais than 2.10 reais
(per dollar)," said Luciano Rostagno, chief strategist with
WestLB Brasil in Sao Paulo. "If it goes forward with the auction
and central banks abroad issue stimulus, the dollar could break
2 reais, and the government has already shown that it doesn't
want that."
The real has been stuck in a narrow range between 2.0 and
2.05 reais in the past several weeks, in what traders call an
informal trading band imposed by the central bank.
The Chilean peso was 0.2 percent stronger, on the
other hand, at 482.60 per dollar.

Latin American FX prices at 1745 GMT

Currencies daily YTD pct
pct change
Latest change
Brazil real 2.0365 -0.67 -8.25

Mexico peso 13.2850 -0.39 5.15

Argentina peso* 6.3400 1.74 -25.39

Chile peso 482.6000 0.19 7.60

Colombia peso 1,789.2500 0.10 8.33

Peru sol 2.6240 0.00 2.78

* Argentine peso's rate between
brokerages